Unilever withdraws full-year growth outlook, India business impacted

NEW DELHI: Unilever Plc on Thursday withdrew its growth and margin outlook for 2020. The consumer giant said the covid-19 pandemic has wrecked havoc across economies, shifted demand patterns, and brought to halt out-of-home consumption of its brands.

“We will continue to adapt throughout this crisis. However, the unknown severity and duration of the pandemic, as well as the containment measures that may be adopted in each country mean that we cannot reliably assess the impact across our markets and our business. We are therefore withdrawing our previous growth and margin outlook for 2020,” Alan Jope, chief executive officer, Unilever, said in the company’s first quarter statement.

The maker of Dove shampoo and Surf Excel detergent said underlying sales growth in developed markets in the first quarter stood at 2.8%, while in emerging markets sales growth declined 1.8%.

Turnover increased 0.2% including a positive impact of 0.6% from acquisitions net of disposals and negative impact of 0.4% from currency. Overall, underlying sales were flat with volume growth of 0.2% and negative price of 0.2%, the company said.

Jope said globally “demand patterns are changing”. While sales of hygiene and in-home food products have been on an upswing with households stocking up in advance, others such as its ice-cream, and foods business have taken a hit.

“As the crisis hits countries around the world, we see upswings in sales of hygiene and in- home food products, combined with some house hold stocking, and near cessation of out of home consumption which is particularly affecting our food service and ice cream business,” Jope added.

The company is adapting to new demand patterns and are preparing for lasting changes in consumer behaviour, in each country, as the world moves out of crisis and into recovery.

India Business

Unilever, which is has a significant presence here through Hindustan Unilever Ltd, said the Indian market had slowed down even before the lockdown came into effect.

Things worsened, with many large companies witnessing curbs on production, and movement of goods when the lockdown began at the end of March

As a result, "growth in India", Unilever said, "was hit by both the slowing market and the lockdown which stopped production and shipping for a number of days."

HUL, the bellwether of the packaged consumer goods industry in India, is scheduled to announce its earnings on 30 April.

In the Asia region, Africa, Middle East and Turkey, and RUB region, including Russia, Unilever said its underlying sales declined 3.7% led by volume decline of 3.4%.

In India, it added that lockdown severely limited the flow of goods, leading to a decline in the South Asia region.

Within categories, Unilever said tea declined in low-single digit, impacted by India and out-of-home channel closures. Within its beauty and personal care portfolio, the company's skin and hair care portfolio was hit.

The company said at individual market levels, most lockdowns have required closures in out of home channels, resulting in little out of home consumption of ice cream and food. However, the initial household stocking of both hygiene and food products has led to increased volume in some markets.